CO129-601-2 Salaries Commission- currency basis of emolument 27-1-1949 - 23-7-1949 — Page 4

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To Hong Kong

- Tel 171 Confe

10-2-49

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3. 6. G. S. Follows So. 10/06/4) 11. 5-4-49.

1. I t..ink Mr. Follows' analysis of the

•position in (3) is correct and that there would be no danger in acceding to his suggestion. After all, I can see that the reservation in (21) on the 1948 file might give rise to doubts. Suppose A has opted for the 1/3d. rate, retires and is drawing pension. The value of the Hong Kong dollar drops as against sterling and there is a salaries revision of dollar dalaries in an upward direction. Since A has retired, he would have no salary to be revised and there would be no need to vary the 16 to the rate at which his pension has been calculated. But this reservation has impl nted in his mind the thought that the rate of 16 to the £ might be reviewed and therefore that his pension might be affecteḍ.

2. It looks rather weak to make a reservation and then withdraw it, but I think we should do it here and leave it to Hong Kong to put across the straight option, exercisable now, without any conditions - vide. paragraph 3 of (3).

3. The Treasury were in on this case up to the issue of (21) on the 1948 file. We did not copy to them the exchange at (1) and (2) on this file, nor is this of importance since from Mr. Follows' letter it appears that the Hong Kong Government have accepted our view in (2) and dropped their

proposal